Lew signals support for tax code rewrite

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WASHINGTON Jacob Lew, President Barack Obama's nominee for Treasury secretary, pledged to work with Congress on a comprehensive overhaul of the tax code while urging lawmakers to avoid automatic spending cuts that could slow economic progress.

During a three-hour confirmation hearing Wednesday, Lew took questions about how he would handle a number of challenging issues, including Europe's debt crisis, U.S.-China relations and the 2010 financial regulatory overhaul.

But the sharpest questions focused on his brief tenure at Citibank, where he was a top executive during the height of the financial crisis. Republicans pressed him about his duties and a nearly $1 million bonus he received when the bank was being bailed out by taxpayers.

When the hearing ended, Sen. Orrin Hatch, the panel's ranking Republican, said he thought Lew had “done very well.”

Lew, 57, most recently served as Obama's chief of staff. He is expected to win Senate confirmation late this month and would succeed Timothy Geithner.

Much of Lew's testimony reflected the Obama administration's message. He advocated reducing the long-term budget deficit through spending cuts and additional tax revenue. He said he would be open to “sensible reforms to Medicare.” And he urged lawmakers to avoid $85 billion in defense and domestic spending that are set to kick in on March 1.

The cuts, Lew said, would impose “self-inflicted wounds to the recovery and put far too many jobs and businesses at risk.”

He said he would look forward to working with members to rewrite the tax code and that the way to accomplish it would be to scale back deductions so that tax rates can be lowered.

“But broadening the base means taking on a lot of entrenched interests,” Lew said. “I think we can do it.”

Lew declined to say what current deductions he would recommend scaling back.

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